The government said the U.S. economy lost 11,000 jobs last month, far fewer than the 130,000 analysts had expected, which sent bond prices sharply lower and fueled a rally in riskier assets such as stocks.
Though heartening news for those among the 10.0 percent of the work force who are still unemployed, the data is a huge threat to the historically expensive Treasury market.
Bond yields have been kept low on the view that the weak economy and poor jobs outlook will damp inflation and prevent the Federal Reserve from raising interest rates from near zero any time soon, but that notion could now be at risk.
'Treasury market yields are soaring right now because if the economy is going to see sustainable growth, the day is nearing when the Fed will have to make good on its plans for an exit strategy,' said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.
'We're almost back to normal, 11,000 jobs away from creating jobs. Those looking for gloom and doom forecasts for the economy will be disappointed. The economy is lifting at a much greater rate than expected.'
The news sent yields to three-week highs on a broad range of bond maturities ranging from two to 30 years.
The 30-year long bond was down well over a point in price to yield 4.40 percent.
The benchmark 10-year Treasury note was last down 24/32, yielding 3.47 percent.
(Reporting by Burton Frierson and Ellen Freilich; Editing by Padraic Cassidy) (burton.frierson@thomsonreuters.com;+1 646-223-6292; Reuters Messaging: burton.frierson.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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